The free fall in the standard of living of the Czechs should stop next year. People will see an increase in real wages, which have been falling for almost two years due to high inflation. According to the analysis of the Czech National Bank, companies can now afford to add and employees can therefore look forward to an improvement in their financial situation.
This year will be marked by further impoverishment. From next year, however, the situation will change drastically. This is evidenced by Trinity Bank’s calculation, which is based on data from the Ministry of Finance’s inflation forecast and the development of nominal wages from the Czech National Bank. The calculation also shows that growth will be above average and the highest since the pre-pandemic year 2019.
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“Adjusted for inflation, wages in the Czech Republic should rise by 3.9 percent. The key reason for real wage growth next year will be a drastic drop in year-on-year inflation, which will occur right from the beginning of next year,” said Trinity Bank chief economist Lukáš Kovanda.
Councilors of the Czech National Bank predict that we will see inflation at the level of three percent at the beginning of next year. “The increase in earnings, which next year will nominally correspond to less than seven percent, should thus exceed inflation by a fairly significant margin,” Kovanda said.
According to the data, real wage growth should be 3.9 percent, which means that the indicator will surpass the average of the years 1994 to 2023. This corresponds to only 2.8 percent.
This year, however, people still have to prepare for the fact that they will lose money due to inflation. The increase in wages will not cover the high price increase. According to Kovanda, wages will fall at the second most significant rate since 1993. Workers were even worse off last year. Last year, the real wage fell by 8.5 percent, and this year by 2.5 percent.
The state will lay off
Next year, however, the standard of living of Czech employees will not only improve. There will be changes in the labor market that have not been so frequent recently. For example, the state is preparing to cancel some jobs.
According to Finance Minister Zbyňek Stanjura (ODS), departures should take place within offices and ministries. “From December 2021, that number will already be around 1,200 to 1,300 jobs. In my resort, it is not little at all. As of January 1, I propose to reduce the number of jobs by 400,” Stanjura said on Terezia Tománková’s Partie program.
But the minister warns that 400 resignations will not be handed out at once. “We will not recruit new people for the first one, and the others are leaving,” added Stanjura, who also recalled the record low unemployment in the Czech Republic.
You can see more about the topic of layoffs and savings in the program Partie Terezia Tománková here:
Tags: impoverishment Czech Republic record wage growth companies economist predicts
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